Sale Leaseback Peddler Dodges Major Penalties After Missouri AG Probe; Agrees To Pay $51K Restitution To Screwed-Over Victims Of Equity Stripping Scam

From the Office of the Missouri Attorney General:

• Attorney General Chris Koster said [] he has obtained a consent judgment against a Greene County man who allegedly engaged in a foreclosure scam to trick vulnerable homeowners into transferring ownership of their homes to him and his associates.
• Koster filed an amended petition against Brian Thompson, of Greene County, in 2009, contending that he engaged in a “foreclosure rescue” scheme to gain the equity in homes that were subject to foreclosure.
• According to the amended petition filed by Koster’s office, Thompson would search foreclosure listings in a periodical called “The Daily Events.” He would then contact homeowners promising to stop their foreclosures by purchasing the home or finding a buyer for the home who would pay off their mortgage. Thompson and his associates kept the equity in the homes as profit.
• Thompson then told homeowners he would lease the home back to them and would resell them the home if they could obtain a new mortgage. There was no written contract between Thompson and the homeowners setting out the terms of his services or the amount of his fees.
• Some homeowners ended up losing title to their homes or the equity in their homes; others were evicted from their homes when they were unable to make their lease payments.

***

• Koster said under the consent judgment, Thompson is required to pay $51,000 restitution and is prohibited from violating Missouri’s Merchandising Practices Law in the future.

For the Missouri AG press release, see Attorney General Koster announces settlement in foreclosure scheme.

Michigan AG Probe Leads To 'False Pretenses' Conviction, At Least 30 Months Incarceration For Head Of Loan Modification Racket

From the Office of the Michigan Attorney General:

• Attorney General Bill Schuette [] announced the sentencing of a DeWitt man who pled guilty to five felony charges in connection with his role in an illegal advanced fee "foreclosure rescue" operation. Isaac Modert, 28, defrauded four Michigan homeowners with homes in Lansing and Benton Harbor. As a result of Modert's actions, the four victims lost more than $20,000 and one Lansing couple ultimately lost their home to foreclosure.

***

• Modert told victims that his company, LCN Mortgage, would work with their lenders to secure a loan modification. To execute the scam, Modert enlisted the help of two employees, Aaron Teachout and Ben Walcott. Teachout assisted by arranging deposits of victims' funds into a bank account. Walcott pretended to be a loan officer who met with victims and collected payments for fabricated fees and costs related to the alleged loan modifications. Despite assurances to the contrary, Modert made no attempt to modify victims' mortgages after defrauding them of more than $20,000.

For the Michigan AG press release, see Schuette Announces Sentence for Mid-Michigan Foreclosure Rescue Scam Case.

(1) Isaac Modert was sentenced to the following:

• Serve 30 months to 84 months for one count of Using a Computer to Commit a Crime, and
• Serve 30 months to 60 months for four counts of False Pretenses ($1,000 - $20,000).

(The two sentences will be served concurrently).

• Pay restitution in the amount of $20,751.40. Modert previously paid $2,000 when he entered his guilty plea on February 10, 2011, which will be applied to his total restitution payment.

Modert's company, LCN Mortgage, was also sentenced for four counts of False Pretenses ($1,000 - $20,000) and must pay a fine of $1,000 and restitution in the amount of $20,751.40.

Modert's two employees have already been convicted for their roles in the foreclosure scam:

• Aaron Teachout, 26, of Charlotte pled guilty to one count of False Pretenses (Less than $200), was sentenced to twelve months probation, and was ordered to pay $1,000 in restitution by June 1, 2011, and he previously paid $200 on the day of sentencing.
• Ben Walcott, 26, of Grand Rapids, pled guilty to one count of False Pretenses ($1,000 - $20,000), agreed to pay restitution of $4,100, and was sentenced to five years probation and 220 days in jail.

Convicted Sticky-Fingered Escrow Agent Who Used Check-Kiting Scheme To Pocket $1.5M Among Three Tagged w/ Administrative Charges By Minn. Regulator

From the Minnesota Department of Commerce:

• The Minnesota Department of Commerce is continuing its crackdown on title insurance companies and mortgage originators in the state for allegedly misappropriating funds, charging fees for services not rendered, paying illegal rebates and misleading both lenders and borrowers in order to drum up business. Commerce Commissioner Mike Rothman last week signed three separate enforcement actions against mortgage originators and title agencies for alleged abuses and violations of Minnesota law.

The Commerce Department describes one administrative action against an allegedly sticky-fingered real estate closing agent:

• The Department charged Linda Tuttle-Olson, owner of Albert Lea Abstract Co. (aka Freeborn County Abstract Co.), with allegedly misappropriating about $1.5 million in client funds. Tuttle-Olson allegedly used a portion of the misappropriated funds for her own use, spending large amounts gambling at the casino.
• The department's investigation, which began in May 2010, found that in at least 37 cases, Tuttle-Olson misappropriated funds from escrow accounts and moved them to other bank accounts and to herself by "kiting" checks and issuing checks on accounts without sufficient funds. Check kiting is a systematic pattern of depositing non-sufficient funds (NSF) checks between two or more banks, resulting in the books and records of those banks showing inflated balances that allow NSF checks to be honored rather than returned unpaid. Examples of Tuttle-Olson's check kiting scheme can be found in the department's statement of charges.
• A prehearing conference will be held Thursday, June 16 at the Office of Administrative Hearings in St. Paul. Tuttle-Olson and her company may be subject to a fine of up to $10,000 per violation.
• Tuttle Olson pleaded guilty to wire fraud last week in U.S. District Court. She faces up to 20 years in federal prison. The federal case was built on the Department of Commerce's investigation.

For more, see Check Kiting, Operating a Bait-and-Switch Scheme and Paying Illegal Rebates, Kickbacks Among List of Charges.

Finding Attorneys To Replace Dumped Foreclosure Mills A Chaos-Creating Struggle

The Wall Street Journal reports:

• Moves by banks to ditch law firms snared in the "robo-signing" mess are spreading delays and confusion to borrowers, while angering judges grappling with thousands of foreclosure cases now trapped in limbo.
• The trouble began when U.S. banks and government-owned mortgage giants lost confidence in some law firms that handled a huge volume of foreclosures. After controversy erupted last fall over the shoddy review of loan documents known as robo-signing, banks dropped some law firms.
• Finding replacement lawyers who can pick up the slack quickly has been a struggle. While the resulting slowdown means that fewer houses are being seized, late fees are piling up for homeowners seeking a loan modifications. Investors who own bonds backed by those mortgages could face higher costs from the snags.
• "It's causing chaos because nobody knows who's representing whom," says Thomas Ice, a foreclosure defense lawyer in Royal Palm Beach, Fla.

For more, see Foreclosures Trapped by a Lack of Lawyers.

C. Florida Judge Spanks Two Foreclosure Mill Chiefs, Revokes Phone Privileges Over Lack Of Diligence In Prosecuting Cases, Using Unprepared Lawyers

In St. Petersburg, Florida, The Tampa Tribune reports:

• St. Petersburg foreclosure court judge Pamela Campbell is fed up with foreclosure law firms' errors and missed hearings. So today, she ordered the heads of two major law firms that handle foreclosures on behalf of banks to show up in her Pinellas County courtroom to explain themselves. It didn't matter that they're based in Ft. Lauderdale.
• Roy Diaz, Of Smith, Hiatt & Diaz and Marshall Watson, of the firm Marshall C. Watson both appeared before Judge Campbell, who asked them about problematic foreclosure documentation and reports of their firm sending homeowners to the wrong courthouse. "Go to your basic roots of when you were in law school," she said, chastising the lawyers.

***

• The judge wanted to know why some cases were languishing and blamed the attorneys for not paying better attention. Campbell said she called them to court because she's tired of them blocking off time for cases, then sending unprepared junior lawyers.

***

• Judge Campbell's verdict: She revoked phone privileges for both firms that allowed them to appear in court by phone. In other words, the South Florida firms will have to send a lawyer in person to present cases from now on.

For the story, see Judge chastises foreclosure law firm chiefs.

More Multi-Unit Building Foreclosures, More Water Shutoffs Leaving Rent-Paying Tenants High & Dry

In West Palm beach, Florida, WPEC-TV Channel 12 reports:

• They paid their rent, but a group of West Palm Beach residents say they have been without water for days. All the people who had been paying rent to live at the Pine Ridge Apartments on Division Avenue have children, and now a third day of no water is making life tough.
• The building is apparently in foreclosure. But the residents say there was a man who portrayed himself as the landlord and had been collecting rent on eight of the units. This week the residents say the man disappeared and the city came to turn off the water because the bill was past due.
• "The water is supposed to be included in our rent, so now we are stuck here with no water," said one resident. CBS 12 spoke with a representative of the building's previous owner, who told us a charity group had purchased the property. The former owner's representative was stunned to learn people are living here. Residents are hoping someone can help them get the water back on, at least until they can find other places to live.

Source: Landlord collects rent, but shuts off H2O.

Residents In Foreclosed Mobile Home Park Suffer Water Shutoff As Rent Skimming Ex-Landlord Pocketed Rents While Stiffing City On H2O Bill

In Great Falls, Montana, the Great Falls Tribune reports:

• Residents in a mobile home park [...] had their water service shut off [...] Wednesday by the city of Great Falls. Tenants were worried and upset by the shutoff, which affected a dozen occupied mobile homes and more than two-dozen people. "We paid our rent," resident Jessica Chandler said. "We have no place to move."
• Chandler said the former property owner, Larry Frates, stopped paying the city water bill in October, and tenants were threatened with a water shutoff this spring. Chandler said the rent payment includes water service. Frates could not be reached for comment Wednesday.
• City Attorney James Santoro said he advised the city's Water Department to give tenants extra time before the water was shut off. A recent notice said the city still was owed $5,466 in payments for water, Chandler said. "We've had to haul water to use our toilet," she added. "It's just like camping out in a big trailer with no plumbing."
• Chandler said she called various social services agencies, but added that tenants have received little help so far in finding new places to live. New landowner Corey Welter of Billings said he obtained the land in mid-February through a sheriff's sale and a foreclosure, but said Frates still owns the mobile homes on the property.

For more, see Ex-landlord's water woes leave renters high and dry.

For story update, see Mobile homes receive emergency water:

• Residents of an ill-fated mobile home park [...] in Great Falls received emergency deliveries of water Friday, but a long-term fix for their predicament remained elusive. [...] The Salvation Army was at the park Friday morning providing water and clean-up kits. "This is certainly a disaster for the families involved," said Jesse E. Oldham Jr., emergency and disaster services coordinator for the Salvation Army, in a press release. The Cascade City-County Health Department asked the Salvation Army to help the residents.

Land-Rent-Paying Mobile Home Owners Fear Getting The Boot After Discovering Park Owner Faces Foreclosure

In Williamston, Michigan, WLNS-TV Channel 6 reports:

• People living in a local mobile home park are now wondering if they'll have a place to live next month after finding out their lots have all been foreclosed. Tenants at Village Square in Williamston say management kept the foreclosure a secret.
• Leona Edmonds, 12 year Village Square resident: "I am a nervous wreck over it." Shannon Niezgoski, 17 year Village Square resident: "We're all scared, we're all very concerned, we don't know what to do." [...] News Niezgoski says she and others first learned Saturday, not from management, but from a neighbor who found a foreclosure notice posted to the park manager's door.

For the story, see Mobile Home Owners Losing Lots To Foreclosure.

State Bar Bags Four More For Alleged Client Trust Account Ripoffs

In St. Augustine, Florida, Historic City News reports:

• Karen Y. Kirksey reported to Historic City News that in recent court orders through April 12, 2011, the Florida Supreme Court disciplined 16 attorneys — disbarring three, suspending ten and issuing public reprimands to three.

According to the story, the following four attorneys have been disciplined for allegedly ripping off clients by pocketing their cash sitting in a clients' trust account for their own personal use:

• Richard Lawrence Brown, 4440 P.G.A. Blvd., Suite 600, Palm Beach Gardens, suspended until further order, following an April 7 court order. (Admitted to practice: 1993) According to a petition for emergency suspension, Brown appeared to be causing great public harm by misappropriating client funds. An audit revealed that Brown converted at least $21,850 from his trust account and used it for personal and business purposes;
• Theodore Ross Dempster, 801 Brickell Ave., Ph-1, Miami, disbarred for seven years, effective immediately, following a March 16 court order. (Admitted to practice: 1976) An audit revealed that Dempster misappropriated client funds to satisfy personal and business obligations, in a manner similar to a Ponzi scheme. Dempster has been found guilty of violations including: misrepresentation, and engaging in dishonest, fraudulent and deceitful conduct. The auditor found numerous trust account violations and a failure to produce all the required bank records requested in the Bar’s subpoena.;
• Clint Johnson, 250 N. Orange Ave., Suite 550, Orlando, suspended until further order, following an April 11 court order. (Admitted to practice: 2003) According to an emergency suspension order, Johnson appeared to be causing great public harm by misappropriating trust funds for personal use;
• R. Patrick Mirk, P.O. Box 18201, Tampa, disbarred following an April 7 court order. Mirk misappropriated more than $31,000 in client funds held in his trust account.

Source: Supreme Court disciplines 16 attorneys.

Bay State Attorney Screws Up, Leads To Tax Foreclosure, Condemnation & Demolition Of Dead Woman's Home Despite Being Retained By Heirs To Handle Case

In Boston, Massachusetts, The Patriot Ledger reports:

• Former Norfolk County prosecutor and well-known Quincy lawyer Gerald Kirby has been suspended from practicing law as a result of his alleged mishandling of two unrelated estate cases. The Board of Bar Overseers said Kirby’s license was suspended for a year.

***

• [One] case Kirby handled involved the property of a Randolph woman who was 90 when she died without a will in March 2006. At the time of the woman’s death, her only significant asset was a vacant building and [...] in Randolph. The land had an assessed value of $136,900.
• Shortly before the woman died, the town of Randolph filed a petition to foreclose on the condemned property in an attempt to claim $13,578 in unpaid taxes. The town also had a lien of $6,975 for health board costs. In June 2006, the woman’s family paid Kirby $1,000 to prepare the property for sale so proceeds could be divided among her eight children.
• Board investigators found Kirby never made an appearance nor did he file documents in Land Court regarding the case.
• After obtaining foreclosure rights, the town spent about $10,500 to demolish the home in January 2007. The board alleged Kirby did not adequately respond to his clients’ questions while the matter was unfolding. Kirby ignored repeated requests to return his $1,000 fee and neglected to provide an itemization of his time and services, the board stated.

For the story, see Well-known Quincy lawyer suspended for allegedly mishandling cases (He gets one-year suspension for allegedly mishandling two estate cases).

Las Vegas Feds Bag Local Man Accused Of Peddling Bogus Mortgage Refinancing, Loan Modification Services Targeting Financially Distressed Homeowners

From the Office of the U.S. Attorney (Las Vegas, Nevada):

• Alex P. Soria, 64, of Las Vegas, was indicted on Wednesday, April 20, 2011, and charged with six counts of wire fraud, three counts of mail fraud, one count of concealment of information from the Social Security Administration and one count of theft of government funds.

***

• According to the indictment, Soria had worked in the mortgage lending industry since about 1970. From about May 2008 to January 2010, Soria allegedly devised a scheme to defraud distressed homeowners who were trying to refinance or adjust their home mortgages.
• Soria solicited the homeowners through advertisements and word of mouth to hire him as a mortgage agent to assist them with their mortgages. Soria allegedly falsely told the homeowners he was a loan officer with Amwest Capital and that he could help them obtain relief with their mortgages through two federal programs, Hope for Homeowners and the Troubled Asset Relief Program (TARP). Soria also falsely told the homeowners that he had helped other homeowners obtain financing. In truth, Soria’s Nevada mortgage agent license had expired in April 2008 and he lacked licensing or status to help the homeowners obtain financing through the federal programs.
• In order to make the homeowners think they were going to receive assistance with their home mortgages, the indictment also alleges that Soria provided false information to the homeowners, such as letters stating they had prequalified for refinancing and emails stating they were on track to receive help or that the government was to blame for loans not closing.
• In fact, Soria did not obtain government assistance for any of the victims identified in the indictment, even though he fraudulently collected approximately $17,000 from 15 homeowners through the alleged scheme.

For the U.S. Attorney press release, see Federal Charges Filed Against Las Vegas Man For Defrauding Distressed Homeowners.

Indicted Mid-Atlantic Loan Mod Operator Faces F'closure As Ex-Client Enforces $686K Judgment Lien Obtained In Suit Over Failed Mortgage Workout

The Huffington Post reports:

• Accused mortgage-modification fraudster Howard Shmuckler has lost the website he used to call his accusers “the real scammers.” Even though Shmuckler had been indicted and repeatedly sued for charging homeowners for modifications he never delivered, he maintained his website until a court order went against him earlier this month.
• Shmuckler charged homeowners thousands of dollars in upfront fees on the promise he would get them mortgage modifications to help them stay out of foreclosure. Yet, hundreds of his clients never received mods, according to the Maryland government and attorneys representing homeowners in Virginia, where the now-defunct Shmuckler Group had been based.

***

• Virginia resident Hassina Ansary sued Shmuckler in 2009 for charging her $2,000, but doing nothing while her home slid into foreclosure. A Virginia jury took her side and order Shmuckler to fork over $686,600.

***

• In an ironic twist, Shmuckler is now fighting to save his own home: Last summer Ansary filed a civil complaint to force him to sell his Virginia Beach house to pay the judgment she'd been awarded as a victim of his scam.

For more, see Accused Mortgage Scammer Loses His Wacky Website After Court Order.

F'closure Mill Scores Win In Sloppy Paperwork Case; Dodges Contempt Charges After Invoking "Pure Heart-Empty Head" Defense; Judge Allows Case Refiling

In Miami, Florida, The Palm Beach Post reports:

• A Miami-Dade County Circuit Court judge is withholding a finding of contempt against attorney Marc Ben-Ezra but issued sanctions Wednesday requiring his firm to clean up its foreclosure practices.
• Ben-Ezra, founding partner of Fort Lauderdale-based Ben-Ezra & Katz, was held in contempt by Judge Maxine Cohen Lando during a February hearing where she criticized the firm for "shoddy" and "grossly negligent" foreclosure work. But in a four-page order issued Wednesday, Lando said subsequent briefings and hearings have softened her stance.
• "The court appreciates Mr. Ben-Ezra's expressed desire to change his firm's procedures as expressed to the court by Compliance Counsel Daniel Gelber and, as stated above, will withhold a finding of contempt upon either the firm or Mr. Ben-Ezra," Lando wrote.(1)

***

• Lando's sanctions against the firm include requiring that cases be assigned to specific attorneys and that attorneys come to court prepared. She set a July 8 hearing to review the firm's progress. Lando's order also requires Ben-Ezra & Katz to pay defense attorney Maria Mussari $12,982 in attorney's fees and costs.
• Mussari, who represented the homeowner in the case that Lando originally found Ben-Ezra in contempt on, said the foreclosure was dismissed but may be refiled. During the February hearing, Lando said she was barring it from being refiled, but Mussari said the judge has reconsidered that ruling.(2)

For more, see Attorney's contempt finding withheld, law firm dropping its foreclosure operations.

(1) Ben-Ezra won the day here with his successful invocation of the "pure heart and empty head defense" in an attempt to minimize any possible sanctions for his firm's sloppy work, despite such a defense is generally looked upon by the courts with disfavor. See, for example, Warner v. Hillcrest Medical Center, 914 P.2d 1060 (Okla. Ct. Civ. App. 1995), stating:

• "Whether or not the acts of an attorney are done in good faith is no longer the test."`[T]he new test represents an intentional abandonment of the subjective focus of [§ 2011] in favor of an objective one.' `Simply put, subjective good faith no longer provides the safe harbor it once did.' `There is no room for a pure heart, empty head defense under [§ 2011].'" First National Bank and Trust Company of Vinita v. Kissee, 859 P.2d 502, 512 (Okla. 1993) (footnotes omitted). "Rule 11 requires lawyers to think first and file later, on pain of personal liability." Stewart v. RCA Corp., 790 F.2d 624, 633 (7th Cir. 1986).

(2) See:

• "The Eleventh Judicial Circuit Does Not Have A Rocket Docket!" Says Judge As She Dismisses Foreclosure Action, Cancels Debt Over Sloppy Paperwork,
• Head Of Florida Foreclosure Mill Ordered Into Court To Explain Dubious Document Filings In Recently-Dismissed Suit.

It may be that Judge Lando went off the deep end a bit too far when originally cancelling the foreclosing lender's debt due to the Ben-Ezra firm's screw-ups and had second thoughts when she regained her senses reconsidered her earlier ruling.

Calls Continue For War Against MERS Over Robosigned Mortgage Documents Littering Deed Registries, Alleged Recording-Fee-Dodging Ripoffs

In Essex County, Massachusetts, the Newburyport Daily News reports:

• According to a press release issued by [John O'Brien of the Southern Essex District Registry of Deeds in Salem] Tuesday, "In 2010 alone, 286 Bank of America mortgage discharges were recorded with what (were) questionable and possibly fraudulent signatures of the notorious Linda Green."
• O'Brien's office carefully scrutinized the signatures and produced four examples of the name "Linda Green" that were clearly signed in four distinctive styles of handwriting. Among them was a mortgage for an Amesbury homeowner.
• For those unfamiliar with the recent "60 Minutes" piece on this scandal, Green was one of the so-called "robo-signers" whose job was to affix her signature to a multitude of documents in order to speed them through the foreclosure process.

***

• [A]ccording to this week's release, "O'Brien fears that this fraudulent behavior is only the tip of the iceberg ... (and) actions which he originally only thought involved a scheme to circumvent the land recordation system by creating a private, for-profit cyber-registry to benefit the big banks' pocketbooks," may have mushroomed into outright fraud against consumers and the government.

For the story, see Probe has big banks on the run.

In a related story, see The Enterprise: Board to ask Coakley about possible lawsuit against mortgage corporation:

• The Bristol County Board of Commisioners voted unanimously Tuesday to send a letter to Massachusetts Attorney General Martha Coakley expressing interest in pursuing litigation against Mortgage Electronic Registration Systems, Inc, commonly known as MERS, for skirting public recording laws.

***

• The move comes after Essex County officials recently asked Coakley to consider suing MERS over the loss of real estate recording fees. The Essex County Register of Deeds, John O’Brien, said his agency has lost upwards of $22 million in fees because of MERS.

NC Deed Registry Official Calls Paperwork Robosigned By Phony Bank VPs "A Ticking Time Bomb" As 1000s Of Dubious Docs Discovered Littering His Office

In Greensboro, North Carolina, the Burlington News Times reports:

• Guilford County Register of Deeds Jeff Thigpen says he has found thousands of examples of apparent fraud in local mortgage documents from major banks such as Wells Fargo and Bank of America.
• His ongoing investigation has so far turned up 4,500 "highly suspicious" mortgage and other loan documents. They feature apparently forged signatures from fictitious bank vice presidents, he said. The signatures are produced in "mortgage mills" contracted by the banks, Thigpen said, where documents can be falsified by the hundreds.
• Representatives of Wells Fargo and Bank of America didn't return calls Monday but have said previously that any such fraud is the fault of contract companies such as DocX, a Georgia-based company that a number of banks hired to process loan documentation.

***

• Thigpen said there is now a national epidemic of foreclosures in which people can't tell who actually owns their loan. Many homes are foreclosed on using the sort of suspicious documents he's now turning up, Thigpen said.
• "But there's another problem, even for those who aren't foreclosed," Thigpen said. "When people try to get another loan or mortgage, what are the chances they'll be approved when the fraud attached to a (borrower's) previous loan comes out? It won't be their fault, but they'll pay for it."
• "This is a ticking time bomb," Thigpen said.
• One of those affected by such a forgery: Guilford County Commissioner Billy Yow. Thigpen said his investigation turned up a loan Yow paid off in 2007. The bank vice president who signed off on the certificate of satisfaction is one of a handful of aliases Thigpen said he's found signed with dozens of different signatures.

***

• Thigpen said while looking into mortgage documentation last month he was contacted by Lynn Szymoniak, an attorney and forgery expert who has trained FBI agents. Szymoniak was recently featured on the news program "60 Minutes," where she talked about uncovering cases of fraud while fighting her own home foreclosure. Szymoniak inspired Thigpen to look into similar fraud in Guilford County.

For the story, see Guilford official: Mortgage fraud 'a ticking time bomb'.

NY AG Sucks Two Investment Firms Holding Interests In Upstate Foreclosure Paperwork-Handling Sweatshop Into Robosigning Probe

The Wall Street Journal reports:

• New York Attorney General Eric Schneiderman has issued subpoenas to two investment firms that own stakes in a paperwork-processing firm under investigation regarding questionable foreclosure practices, according to people familiar with the situation.
• Mr. Schneiderman, who took office in January, recently sought information from Tailwind Capital and Ares Capital Corp., these people said. The subpoenas are "very thorough" and "broad-ranging," said one person familiar the matter, who declined to be more specific. Recipients of subpoenas must produce testimony or documents, typically sought as part of an investigation.
• Mr. Schneiderman's move is a sign that investment firms that have sought to profit from the boom in foreclosures could be drawn into various probes by U.S. and state regulators of so-called robo-signing and other foreclose-paperwork problems.
• Ares, with $13 billion under management, holds $31.3 million in debt and $3.8 million in equity in Pillar Holdings Inc., the holding company for Pillar Processing, which does back-office work for the law firm of Steven J. Baum, of Amherst, N.Y., and a Connecticut law firm.

For more, see Firms With Pillar Ties Get Subpoena (requires paid subscription; if no subscription, GO HERE, then click appropriate link for the story).

Deutsche Bank Among "The Largest Slumlords In Los Angeles" Says City Seeking Million$ In Fines Over Graffiti-Scarred Dens For Squatters, Thugs

In Los Angeles, California, the Los Angeles Times reports:

• The Los Angeles city attorney's office accused officials at Deutsche Bank, a German financial institution, of being among "the largest slumlords in Los Angeles" and filed an unusual lawsuit Wednesday asking a judge to fine the company hundreds of millions of dollars and issue an injunction forcing it to clean up the foreclosed properties it owns in Los Angeles, which have numbered 2,000 over the last four years.
• After a yearlong investigation, city officials claimed in court papers that Deutsche Bank has illegally evicted tenants, shut off their water and power and then let hundreds of properties turn into graffiti-scarred dens for squatters, gang members and other criminals, destroying quality of life and driving up crime in the process.

***

• Los Angeles' legal action comes a day after the federal government filed a fraud lawsuit against Deutsche Bank accusing the firm of recklessly approving mortgages "in blatant disregard" of whether borrowers could make the required monthly payments. The government is seeking more than $1 billion in that suit.

For the story, see L.A. says Deutsche Bank among city’s largest slumlords, files suit seeking hundreds of millions of dollars.

Kentucky Bank Found Liable For $1M+ For Its Role In Scam That Screwed Couple Out Of $800K+ In Development Deal

In Oldham County, Kentucky, the Louisville Courier Journal reports:

• An Oldham County jury has ruled that a Louisville bank must pay $1 million to $1.4 million for participating in a fraud case that cheated a Prospect couple out of more than $800,000. The ruling Tuesday is the largest fraud award in Oldham County in at least 10 years, Circuit Court Judge Karen Conrad said.
• The case dated back to 2008, when Patricia Wilhoyte and her husband Eddie, who is now deceased, sued PBI Bank on Eastpoint Parkway near Anchorage, claiming they were owed $881,835 a seven-acres off U.S. 42 near the old Melrose Inn. They had agreed to sell it to a developer who planned to build a subdivision on it.

***

• Conrad said the jury ruled that the Wilhoytes did have some fault because they had some duty to take care of their interest, so it awarded only 60 percent of the $881,835 the Wilhoyte’s were owed. However, it also awarded $881,835 in punitive damages.

For more, see PBI Bank ordered to pay $1 million in Oldham fraud case.

South Carolina High Court Temporarily Slams Brakes On Foreclosure Actions Statewide Involving Owner-Occupied Dwellings

In Columbia, South Carolina, The Greenville News reports:

• Thousands of homeowners facing foreclosure across South Carolina are getting a second chance after state Supreme Court Chief Justice Jean Toal ordered all foreclosures halted until after an intervention process can be completed.
• Toal's order is the second in two years on the issue and the result, she said, of breakdowns in the process. She said judges with jurisdiction over foreclosures have told the Supreme Court they're having trouble because of failed or delayed “mitigation efforts” between those making and servicing the loans and those owing the money. That, Toal said, has caused the number of unresolved foreclosure actions to increase.
• Sue Berkowitz, an attorney and director of the Appleseed Legal Justice Center, which assists low-income citizens with legal matters, hailed the order as a victory for the consumer. “The mortgage companies were not doing what they were supposed to be doing,” she said. “They were losing documents. They weren't going through the process in good faith. I think this is an excellent step forward. This is going to help consumers a lot.”

***

• One problem, Berkowitz said, was that especially with large lenders, communication was poor, leading to situations where homeowners pleaded their case to the bank “and the next thing they know their house was up for sale because while they thought they were negotiating in good faith, the bank was going forward with the legal process.”

For more, see S.C. foreclosures put on hold (Chief justice wants intervention process finished to clear up problems) (subscription required; if no subscription, GO HERE, then click appropriate link for the story).

See also, The Post and Courier: Top court halts some foreclosures: Borrowers, lenders given more time to work out deal.

For Justice Toal's order, see Administrative Order re: Mortgage Foreclosure Actions.

Arizona Appeals Court Kiboshes Bank's Attempt To Steamroll Pro Se Renter Out Of F'closed Home w/o Notice In Violation Of Federal Tenant Protection Law

In Phoenix, Arizona, The Bank of New York Mellon is the latest bankster caught trying to throw a tenant in a foreclosed home out on the street without giving her the proper 90-day notice as required under the Protecting Tenants at Foreclosure Act of 2009 ("PTFA").

After successfully duping an apparently rusty Judge Lindsay Best Ellis, another of the many retired trial jurists from around the country who have been asked to interrupt their retirement years to hear foreclosure cases, that the Federal statute did not apply in giving tenant Patricia De Meo the boot, the bankster got a rude surprise in that De Meo, without legal representation,(1) went to the state intermediate appellate court and asked for a review of the lower court ruling, claiming that her rights under the PTFA were ignored.

In a relatively simple, straightforward review, the three-judge Arizona appeals panel agreed with De Meo and reversed the lower court fumble.

For all the details, see Bank of New York Mellon v. De Meo, 1 CA-CV 10-0177 (Ariz. App. Div. 1, May 3, 2011).

(1) Although acting without legal counsel, De Meo received some additional ammunition by way of a 'friend of the court' brief filed by the Phoenix not-for-profit law firm Community Legal Services ("CLS") on behalf of a number of organizations in support of De Meo’s position. CLS provides legal advice, assistance and advocacy to low-income Arizonans in certain civil legal matters throughout their services areas.

Florida AG Tags Alleged Loan Modification Racket With Civil Suit; Court Slaps Operators With Temporary Asset Freeze, Shut Down Order

From the Office of the Florida Attorney General:

• Attorney General Pam Bondi announced that her office filed a lawsuit on Friday against three South Florida companies that allegedly were charging upfront fees for loan modification services to homeowners facing foreclosure. Charging upfront fees for these services is illegal, per F.S. 501.1377.
• Home Owner Protection Economics, Inc., DC Financial Group, Deleverage America, Inc. and owners Dennis Fischer, and Christopher S. Godfrey purportedly collected thousands of dollars monthly in upfront fees for loan modification services that were never provided. As a result of the lawsuit filed by the Attorney General’s Office, the Palm Beach County Circuit Court ordered the defendants’ assets be frozen and that they be forbidden from operating until further order of the court.
• An investigation conducted by the Attorney General’s Economic Crimes Division indicated that these companies, located in Delray Beach, were allegedly charging upfront fees ranging from $495 to $2,000 for foreclosure-related loan modification services that were never rendered.
• Allegedly, the defendants falsely represented to homeowners that they would work with lenders to reduce the homeowners’ debt and prevent foreclosure, when in reality the lender banks were never contacted on the homeowners’ behalf. The companies were allegedly soliciting hundreds of homeowners nationwide via telemarketing, direct mail, e-mail and Internet, print and TV advertising.

For the Florida AG press release, see Attorney General Bondi Files Lawsuit Against Three South Florida Companies for Foreclosure Rescue Fraud.

California Woman Faces New Charges Of Fleecing Home Equity Out From Under Unwitting Seniors Using Forged Documents

In Whittier, California, the Whittier Daily News reports:

• A Whittier woman who allegedly fleeced an elderly couple out of $273,000 was charged this week with stealing $50,000 from another senior. Helen Hinojos, 45, took out a second loan against a house without the permission or knowledge of the owner, according to sheriff's Detective Christopher Derry. The victim, an 85-year-old Whittier woman, is related to Hinojos by marriage.

***

• Two other suspects, Ruth Farias, 69, of Santa Ana, and Esmeralda Garcia, 29, of Ontario were arrested last week. Garcia is out on bond while Farias and Hinojos remain in county jail. The prosecution charged the three women with one count of theft from an elder or dependent adult which happened between Nov. 1 and 17, 2009. Garcia was also charged with forgery after she allegedly notarized the forged signature of the victim on a deed of trust.

***

• Hinojos helped the victim refinance her home in March 2009. Eight months later, she allegedly used the woman's personal information to apply for a second mortgage on the house. Hinojos made monthly payments on the second loan with money orders so it couldn't be traced, according to Derry. But she was late with a payment. He said the lender sent a notice to the victim who asked Hinojos about it. After fees, he said Hinojos got $42,000 of the loan, Garcia $3,700 and Farias $3,500.
• This is the second case where Hinojos, a loan processor, allegedly scammed a senior. She was charged earlier this year of defrauding a Whittier couple in their 70s from 2008 to 2009.
• The couple wanted to refinance their house in order to buy their daughter's Ontario home which was in foreclosure. They turned to Hinojos, who was a friend of their son. Hinojos allegedly convinced them to transfer the refinancing money into another escrow company. The bulk was put into a trust account.
• Derry said Hinojos convinced the escrow agent to release the money to her, her relatives and friends. She also allegedly took a second loan using the couple's name. They didn't know about the loan and only found out their Whittier home had been sold when a deputy arrived with an eviction notice.

For the story, see Whittier woman charged in second fraud case against senior.

(1) In addition, investigators said Farias, a former licensed real estate broker, allegedly used the company name of a licensed broker in Huntington Beach and submitted the false loan documents to the lender for Hinojos, and charged her with identity theft, the story states.

Wells Bends To Negative PR, Voluntarily Refunds $100K To Clueless F'closure Auction Buyer Of Home Subject To $386K Lien w/out First Doing Title Search

In Broward County, Florida, the South Florida Sun Sentinel reports:

• Gus Armenakis of Coconut Creek said he cashed the $102,600 check on Friday. “I feel like I won the lottery,” he said. The 38-year-old doctor did, in a way.
• In January, he logged in to the Broward County foreclosure auction website and spent six figures on what he thought was a bargain-priced four-bedroom home in Parkland. It turned out to be a worthless junior lien.
• The lender, Wells Fargo, still had a first mortgage worth $386,593. Armenakis filed an objection to the sale, which was denied by a Broward judge. Wells Fargo filed to foreclose, and the auction was scheduled for Wednesday. "It might be legal, but ethically it's not right," Armenakis said last month. Wells Fargo apparently agreed because the lender gave him his money back.
• Novice investors routinely make the same mistake Armenakis made and they don't typically get their money back, auction officials say. All it would take to avoid the headache: a $100 title search. Asked if he intends to get back on the foreclosure auction horse, Armenakis said, “I plan to stay as far away from the real estate market as possible.”

Source: Wells Fargo returns $102,600 to foreclosure investor.

Deutsche Bank's A Liar, Say Feds In "False Claims" Suit Alleging Outfit Ran Racket That Scammed FHA Mortgage Insurance Program

In New York City, The Wall Street Journal reports:

• The Justice Department accused Deutsche Bank AG of "recklessly" lying about the quality of loans made by a mortgage unit of the German bank and guaranteed by the U.S. government.
• In a civil lawsuit filed Tuesday in federal court in Manhattan, U.S. Attorney Preet Bharara sought to recover alleged damages and losses on mortgages insured by the Department of Housing and Urban Development, which could total more than $1 billion.
• The 48-page lawsuit detailed what Mr. Bharara said was a decade-long disregard of basic underwriting standards and quality control at mortgage lender MortgageIT Inc., which was acquired by Deutsche Bank in 2007.

***

• Tuesday's lawsuit against Deutsche Bank is the highest-profile case brought by a unit Mr. Bharara set up last year to pursue civil actions in complex financial-fraud cases. It wouldn't be a "fantastical stretch to think we are looking at other financial institutions as well," Mr. Bharara said at a news conference, declining to be more specific.

***

• "While Deutsche Bank and MortgageIT profited from the resale of these government-insured mortgages, thousands of American homeowners have faced default and eviction, and the government has paid hundreds of millions of dollars in insurance claims," the suit against Deutsche Bank alleged.

***

• The lawsuit was filed under the False Claims Act, which allows the government to seek three times the losses suffered by HUD, as well as punitive and other damages.

For more, see U.S. Says Deutsche Bank Lied (Suit Accuses Lender of Misrepresenting Quality of Loans Made by Mortgage Unit) (requires paid subscription; if no subscription, TRY HERE, then click appropriate link for the story).

For the lawsuit, see USA v. Deutsche Bank.

For the U.S Attorney (Manhattan - New York City) press release, see Manhattan U.S. Attorney Sues Deutsche Bank And Subsidiary MortgageIt For Years Of Reckless Lending Practices.

Law Professors To Bay State High Court: "U.S. Bank, N.A., Was No More Capable Of Passing On Good Title To The Rodriguez Property Than A Common Thief"

An amicus brief filed by four law school professors in a case currently under review by the Massachusetts Supreme Judicial Court involving the rights, if any, of an unwitting 3rd party purchaser of an improperly foreclosed upon house by U.S. Bank belonging to homeowner Pablo Rodriguez contains a discussion of what they describe as two of the most fundamental principles of commercial law: the principle of nemo dat quod non habet ("you can't give what you don't have") and the principle of the bona fide purchase (protects parties who take for value in good faith).

In urging the state high court to affirm a lower court ruling(1) finding that the 3rd party purchaser acquired void title as a result of the improperly conducted foreclosure, the four professors argue their position that "U.S. Bank, N.A., was no more capable of passing on good title to the Rodriguez property than a common thief."

For more, see Amicus Brief - Bevilacqua v. Rodriguez (Amicus Brief Of Professors Adam J. Levitin, Christopher L. Peterson, Katherine Porter, John A.E. Pottow).(2)

See also, Credit Slips: For the Servicers: Is It Better to Rob Peter or Paul? (The U.S. mortgage servicing industry is in deep doo-doo).

Thanks to Deontos for the heads-up on the Credit Slips post.

(1) For Massachusetts Land Court Judge Keith C. Long's ruling currently being reviewed by the state's high court, see Bevilacqua v. Rodriguez, MISC 10-427157 (KCL), 2010 WL 3351481 (Mass. Land Ct. Aug. 26, 2010).

(2) For links to all the briefs filed with the Massachusetts Supreme Judicial Court in this case, see Case Docket - Francis J Bevilacqua, III vs. Pablo Rodriguez, SJC-10880.

Prosecutor: Suspect Facing Financial Elder Abuse, Grand Theft, UPL Charges Pocketed $30K From Elderly Couple After Promising Bogus Foreclosure Rescue

In Santa Barbara, California, the Santa Barbara Independent reports:

• Denise D’Sant Angelo—previously convicted of felony grand theft for stealing $2,800 that donors had intended to help three nuns find housing—is finally back in court facing new charges of financial elder abuse and grand theft.
• D’Sant Angelo and the court heard opening remarks from Deputy District Attorney Brian Cota who alleged she told a couple in their seventies—whom she met while going door-to-door for the nuns—that she could save their longtime house that was about to go into foreclosure.
• She allegedly took $30,000 from them over the course of a year and a half for services never rendered, and used the money to pay her rent. She faces seven charges of financial elder abuse and grand theft, and one count of unauthorized practice of law. She faces a total of 11 years in jail.

Source: Nun Scammer on Trial for Elder Abuse.

Sale Leaseback Peddling Scam Among Accusations Facing Florida Couple Pinched With Multiple Fraud, Racketeering Charges

In Holly Hill, Florida, WFTV Channel 9 reports:

• Holly Hill police say they arrested a woman who tried to sell a nursing home that wasn't hers. Investigators say the woman took hundreds of thousands of dollars from several victims. The alleged mastermind, Vidya Bhoolai, is from Trinidad and immigration officials are trying to determine her status in the U.S. They're also investigating her entire family, who officials say played a role in the scheme surrounding a house.

***

• Amber Moore thought Bhoolai could save her home from foreclosure when Bhoolai offered to purchase it with an option for Moore to lease the home after they made a deal. "She knew the story of the home and the sentimental value that it holds to us and just took everything that I had," Moore said.
• Moore says she gave Boohlai $20,000 over the past year. "I hope she gets the worst thing that can happen to her. I hope she has nightmares every night," Moore said.
• Bhoolai was finally caught after the State Attorney's Office received a tip from a victim. Police completed an 11-month long investigation and arrested Bhoolai and [ex-husband Steve] Sahadath. Both suspects face numerous charges of fraud and racketeering.
• The two are in jail, both with a bond of over $100,000. However, they cannot get out of jail until immigration officials determine their status.

For the story, see Cops: Woman Made Thousands Off Properties She Didn't Own.

Bay State High Court Hears 'Ibanez' Follow-Up Case Involving Unwitting 3rd Party Buyer Who Purchased Void Title On Improperly Foreclosed Home

In Boston, Masschusetts, Bloomberg reports:

• A Massachusetts man should be allowed to keep property he bought from U.S. Bancorp even though the bank didn’t have the right to foreclose on the previous owner, a lawyer argued before the state’s highest court.
• The Massachusetts Supreme Judicial Court is hearing oral arguments today [Monday, May 2] in the appeal of a lower-court decision that said the buyer of residential property in Haverhill, Massachusetts, never owned it because U.S. Bancorp foreclosed before it got the mortgage.(1) If that decision is upheld it could have wide implications in the foreclosure crisis in which banks are accused of clouding home titles through sloppy transferring of mortgages.
• The lower court’s “statement that my client received nothing is what we disagree with,” Jeffrey Loeb, a lawyer for so-called third-party buyer Francis J. Bevilacqua III told the panel today.
• The state high court already ruled Jan. 7 in a different case, U.S. Bank v. Ibanez that banks can’t foreclose on a house if they don’t own the mortgage. That case didn’t address the status of those who buy property from someone after an invalid foreclosure.
• “If the decision is upheld, and generally applied, it likely will have adverse implications for hundreds or even thousands of Massachusetts property owners if they find themselves in Bevilacqua’s shoes,” the Mortgage Bankers Association wrote in a friend-of-the-court brief.(2)
• Claims of wrongdoing by banks and loan servicers triggered a 50-state investigation last year into whether thousands of U.S. foreclosures were properly documented during the housing collapse.

Source: Massachusetts Court Hears Pivotal Mortgage-Transfer Case in Foreclosure.

See also:

• Reuters: Mass. high court wades back into foreclosure mess,
• Faulty Foreclosure Case in Massachusetts High Court May Hurt Home Buyers for an earlier Bloomberg story on this case.

For Massachusetts Land Court Judge Keith C. Long's ruling currently being reviewed by the state's high court, see Bevilacqua v. Rodriguez, MISC 10-427157 (KCL), 2010 WL 3351481 (Mass. Land Ct. Aug. 26, 2010).

(1) See Post-'Ibanez' Fallout Begins; Mass. High Court Takes Case Of Unwitting 3rd Party Buyer Left Holding The Bag w/ Void Title On Improperly F'closed Home.

(2) For the briefs filed with the Massachusetts Supreme Judicial Court, see:

• Appellant Bevilacqua Brief,
• Amicus American Land Title Association Brief,
• Amicus WilmerHale Legal Services Center of Harvard Law School Brief,
• Amicus Mortgage Bankers Association Brief,
• Amicus Massachusetts Attorney General Brief,
• Amicus Professor Adam J. Levitin Brief (together with Professors Christopher L. Peterson, Katherine Porter, John A.E. Pottow) ("[U].S. Bank, N.A., was no more capable of passing on good title to the Rodriguez property than a common thief"),
• Amicus Massachusetts Association of Bank Counsel, Inc. Brief.

Media Report Shines Light On Fort Lauderdale-Area Sale Leaseback, Foreclosure Rescue Peddler

In Broward County, Florida, the South Florida Sun Sentinel reports:

• In danger of losing her home, Robin Klein one day found a flier in her mailbox that promised solutions to her loan-default troubles. "It sounded so romantic: 'Home Rescue,'" the Cooper City woman recalled. "It was an impression I got that they were being altruistic and kind, and helping people."
• Thinking they were staving off foreclosure, Klein and her husband signed a stack of documents furnished by Home Rescue Foundation associates. Among them was a deed transferring ownership of their house, valued at $650,000, to a trust controlled by the foundation's founder, Bradley L. Hertz.(1)
• Robin Klein alleged in a lawsuit against Hertz that the true implications of the deal were never explained to her. Hertz says all clients were dealt with fairly and honestly. "Nobody was fooled. Nobody was coerced," Hertz said in an interview. "The only place they were probably fooled was in their mind. We had full disclosure."
• A Sun Sentinel investigation found that after promising to help save people's homes, Hertz gained control of dozens of South Florida properties whose owners had become financially overextended and fallen behind on their mortgage payments. In the process, Hertz left an extensive trail of litigation, foreclosure lawsuits and court judgments against him and one of his companies totaling more than $3.2 million — and many of the homeowners lost their properties in the bargain.
• In the Kleins' case, they managed to regain their house, but to do so, Robin Klein had to declare bankruptcy. Her lawyer alleged Hertz's associates "falsely and fraudulently" convinced the Kleins to sign the documents by telling them the home would stay in their names and that the "purpose of the transaction was to save their home,'' according to the lawsuit. A federal judge voided the new deed, an action Hertz did not contest.
• "People who are scared and desperate, they are taking advantage of them," said Klein, who sought help from the foundation in the fall of 2006. "It's wrong."

***

• In interviews with the Sun Sentinel, a half-dozen homeowners said Hertz and his associates told them that if they signed their homes over to a Hertz company, or put them in a Hertz-controlled trust, they could avoid foreclosure.

***

• From March 2008 through September of last year, the Cooper City-based foundation was the subject of 10 consumer complaints filed with the state. Three lawsuits also have been filed, claiming Home Rescue misrepresented its services.
• The consumer complaints, filed by homeowners or their lawyers, are being investigated by the Florida Office of Financial Regulation. Some complainants said the foundation's mailings were deceptive because they looked like official government or court documents. Four homeowners complained they paid for help in modifying their mortgages, but got nothing in return. Hertz denies that he offered loan modification services.

***

• After taking title to homes, Hertz often got in trouble with the banks himself for not making mortgage payments. Hertz and Y3K have been named as defendants in two dozen foreclosure suits, court records show, resulting in more than $3.2 million in judgments against them for principal and interest on home loans.

***

• As South Florida's housing market continues to struggle, Hertz is trying to fend off several foreclosure actions, court records show. He filed for bankruptcy in August, but the case was dismissed. In September, he canceled the corporate registration of The Home Rescue Foundation. He lost two more homes to foreclosure in March.

For the story, see To keep homes, some South Floridians signed over deeds — and lost their properties anyway (Home Rescue Foundation's founder says disgruntled clients have only themselves, poor real estate market to blame).

(1) According to the story, Hertz earlier ran a home-health agency in the 1990s that participated in Medicare before going into the foreclosure rescue business. Two of his employees in that scam became federal whistleblowers and alleged in a lawsuit, later joined by the government, that Hertz's company was defrauding Medicare.

Reportedly, Hertz, now 57, pleaded guilty to Medicare fraud and was sentenced to a year of imprisonment in February 2001. He and his company reached a settlement with the government for improperly billing Medicare for entertainment, meals and his father's salary for a no-show job, according to court records. He agreed to repay the government $1.6 million.

After his release from prison, Hertz started a new company, Y3K Investments, which assumed ownership of its first home in Broward in May 2002, property records show. Y3K Investments began doing business as The Home Rescue Foundation in December 2003. Homeowners interviewed by the Sun Sentinel said they learned of the foundation through its fliers or advertisements.

Report: Majority Of Bogus, Inflated Recorded Sales Prices At Orlando-Area Foreclosure Auctions Tied To Six Investor Groups

In Orlando, Florida, the Orlando Sentinel reports:

• A small group of private investors has overpaid taxes on more than 100 Orange County real-estate purchases since January 2010, artificially inflating recorded sales prices to show the properties sold for $2.77 million more than the investors paid.
• The pattern of overpayments — by companies with names such as AA Florida Home Buyers LLC and The Seven Secrets Group LLC — emerged in an Orlando Sentinel review of thousands of foreclosure-auction records kept by the Orange County Clerk of Courts. The Sentinel analysis of foreclosure-auction sales in 2010 and the first quarter of 2011 found 101 examples of so-called "grossed up" sale prices.
• Overpayments of documentary-stamp taxes after the foreclosure sales first came to light in mid-April when the paper became aware of 11 cases. The number of confirmed cases grew nearly tenfold with the review of records.
• By overpaying the tax, investors increased the recorded sale prices for their purchases, disguising the eventual profits made when flipping many of the properties to new buyers.

For more, see Most bogus foreclosure auction prices in Orange tied to 6 investor groups.

(1) According to the story, the majority were purchases made by six investor groups: AA Florida Home Buyers LLC, The Seven Secrets Group LLC, CPR Wholesale & Investment Properties LLC, Global Funding & Development Inc., JJJ Family LLLP and UBON LLC. Dozens of other investors paid the proper taxes. Their sale prices appear accurately in public records, the story states.

Approach To Criminally Prosecuting Players In Subprime Scandal; Go After The 'Low-Hanging Fruit' - Leave The Big Guys Alone

A recent story on the PBS TV program Need To Know probes into the state of criminal prosecutions of those involved in the the subprime mortgage fraud scandal, and questions why the "big fish" on Wall Street appear to be swimming away scott free, while the government seems content to go after the "little fish."

Interviewed for the story in New York Times columnists Joe Nocera (he caught some people's attention earlier this year with his column, Biggest Fish Face Little Risk Of Being Caught) and Louise Story (she chimed in with her recent article, A.I.G. to Sue 2 Firms to Recover Some Losses), who gives their observations based on their earlier reporting .

Nocera describes for Need To Know the story of Charlie Engle and the effort the government sank into bagging him for lying on a liar loan, while allowing the likes of Angelo Mozilo (Countrywide) and others with the resources, good lawyers, and willingness to put up a fight to skate free. This story was the subject of a March, 2011 column, In Prison for Taking a Liar Loan.

Story points out that during the savings and loan crisis of the 1980's, government regulators referred criminal cases to the Justice Department on average ov 1700+ per year, while during the current fiasco, they have only referred on average of about 70 per year.

For the Need To Know story (approx. 24 minutes), see Big Fish - Little Fish.

Bay State Regulator Goes Undercover In Effort To Bag Illegal Loan Modification Rackets "Saturating The Airwaves" With Upfront Fee Come-Ons

In Boston, Massachusetts, the Boston Herald reports:

• More than half of “foreclosure-prevention” companies that heavily advertise on local radio or other media allegedly demand upfront fees that Massachusetts law might prohibit, the state Office of Consumer Affairs says. “It’s really outrageous and it’s really despicable,” said Undersecretary of Consumer Affairs Barbara Anthony, whose office recently conducted an undercover probe of such firms.

***

• Consumer Affairs staffer posing as a homeowner seeking a mortgage “modification” contacted 13 foreclosure-prevention firms that ran ads on WBZ-AM (1030), cable TV’s Travel Channel or Google.com. Five firms never responded, but six of eight that did allegedly told the tester he’d have to pay $500 to $750 up front.
• That’s despite a state law that bans soliciting or accepting “an advance fee in connection with offering, arranging or providing foreclosure-related services,” although exceptions exist for some services provided by lawyers, lenders or mortgage brokers.
• Anthony said she plans to refer the six firms — Creative Loan Modification, HomeRecovery.org, Massachusetts Home Loan Modification Center, Mass Home Relief, National Mortgage Help Center and US Mortgage Relief — to Attorney General Martha Coakley for further investigation.
• The consumer-affairs chief said she ordered the undercover tests after getting fed up hearing the ads on her car radio. “I would practically go off the road sometimes listening to this stuff and calling the office to say: ‘Get this (advertiser’s) name down before I forget it,’” she said. “The ads on the radio are frankly terrible, and they’re saturating the airwaves.”

***

• Hub lawyer Richard Ravosa of the Massachusetts Loan Modification Center said he charges up to a $2,500 advance retainer, but said that’s to counsel homeowners about filing for bankruptcy.
• However, Anthony countered that her undercover tester specifically asked all the companies for help modifying a mortgage, not for assistance filing a lawsuit or declaring bankruptcy. “The regulation (does not include) a blanket exemption for attorneys,” said Anthony, a lawyer herself.

For the story, see State raises red flags over ‘foreclosure-prevention’ companies.

Lawsuit: Countrywide, GMAC Duped Investor Out Of Hundreds Of Million$ In Exchange For Crappy Mortgage Securities

In Hennepin County, Minnesota, the Minneaplois Star Tribune reports:

• Thrivent Financial for Lutherans has sued Countrywide Financial Corp. and GMAC Mortgage over what it describes as "massive frauds" in which it says it was duped into buying hundreds of millions of dollars in mortgage-backed securities.
• Thrivent says it wanted conservative, low-risk investments and believed it was buying only those mortgages that carried the highest, AAA investment-grade ratings. But because Countrywide and GMAC failed to follow their underwriting guidelines, Thrivent says, it ended up holding higher-risk mortgages and has suffered huge losses amid the housing market collapse.
• Between 2005 and 2007, the suit says, Minneapolis-based Thrivent and its affiliates paid hundreds of millions of dollars for 20 mortgage-backed securities offerings from Countrywide and for seven offerings from GMAC. The suit says that two firms either knew or recklessly disregarded the fact that the securities failed to meet the criteria for the AAA ratings they carried.

***

• [I]n the rush to increase market share, the suit says, Countrywide disregarded its underwriting guidelines, pressured appraisers to provide inflated valuations, and made more loans to higher-risk borrowers. Thrivent says Countrywide kept the best-quality mortgages for itself and dumped the riskier loans onto Thrivent and others.
• Thrivent made similar allegations against GMAC, citing a number of confidential witnesses who had worked for the company. Thrivent seeks unstated compensatory and/or rescissionary damages, punitive damages and costs.

For more, see Thrivent sues lenders for 'massive frauds' (Countrywide and GMAC both say that Thrivent should have understood the risks of the mortgage-backed securities it bought).

AIG To Begin Firing Off Lawsuits Targeting Banksters Over Insurance Deals Involving Crappy Mortgage Securities

The New York Times reports:

• The American International Group, the giant insurer rescued by the federal government during the financial crisis, on Thursday will file the first of what could be a series of lawsuits against Wall Street firms, contending that it was the victim of fraud.
• The initial suit, against ICP Asset Management and Moore Capital, will claim that A.I.G. suffered losses insuring mortgage securities created by ICP. The suit says ICP manipulated those securities in a way that benefited itself and Moore Capital, which is not accused of fraud, but harmed A.I.G.
• Though the insurer received a hefty bailout, much of that money ultimately flowed to banks. Now, A.I.G. is trying to “recoup potentially billions of dollars from the fraudulent conduct of these defendants and other parties,” according to a copy of the suit obtained by The New York Times. Because A.I.G. is still largely owned by the government [reportedly 92%], taxpayers would share in any recovery.

***

• A.I.G. is preparing several suits against banks, like Bank of America and Goldman Sachs, that created the $40 billion in mortgage bonds, according to the person with knowledge of the litigation, who was not authorized to talk about it publicly. The company says it believes the banks issued misleading statements about the quality of the mortgages within those bonds, the person said.

***

• A.I.G.’s suit against ICP mirrors a lawsuit filed by the Securities and Exchange Commission last summer [story, SEC lawsuit]. The commission cited four mortgage securities, including two deals known as Triaxx, that were insured by A.I.G. ICP caused Triaxx to overpay for mortgage bonds to benefit itself and a favored client, the commission said.

For more, see A.I.G. to Sue 2 Firms to Recover Some Losses.

2nd South Florida Foreclosure Mill Bites Dust; Outfit Cuts Loose Another 146 Employess As State Bar Confirms Pending Probe Into Firm's Partners

In Fort Lauderdale, Florida, The Palm Beach Post reports:

• A second South Florida law firm is shuttering its foreclosure business following a three-month fall from grace marked by a contempt of court charge against the firm's co-founder and loss of major clients. The Fort Lauderdale-based firm of Ben-Ezra & Katz gave layoff notices to 146 employees Thursday, with another eight from its title agency receiving the same news, said a spokesman, Ray Casas.
• Once one of the larger so-called "foreclosure mills" in Florida with nearly 600 employees, Ben-Ezra & Katz has been cutting staff since February when it was fired by federal mortgage backer Fannie Mae. Before Thursday's announcement, the firm had already laid off 280 employees, according to records filed with the state.

***

• A day after the Fannie Mae announcement, a Miami-Dade circuit judge found the firm's founding partner, Marc Ben-Ezra, in contempt of court for a shoddily handled foreclosure case.(1) The judge has yet to release a final written order and the firm has filed affidavits in its defense hoping to soften the blow.
• Kenneth Marvin, director of lawyer regulation for the Florida Bar, said Thursday it has open investigations into both Ben-Ezra and firm partner Marvin Katz.

For more, see Ending foreclosure business, Ben-Ezra lays off 154.

(1) See:

• "The Eleventh Judicial Circuit Does Not Have A Rocket Docket!" Says Judge As She Dismisses Foreclosure Action, Cancels Debt Over Sloppy Paperwork,
• Head Of Florida Foreclosure Mill Ordered Into Court To Explain Dubious Document Filings In Recently-Dismissed Suit.